In this article, we discuss Warren Buffett’s 3 worst performing stock picks from 2021. If you want our detailed analysis of these stocks, go directly to Warren Buffett’s 5 Worst Performing Stock Picks From 2021.
3. T-Mobile US, Inc. (NASDAQ:TMUS)
Berkshire Hathaway’s Stake Value: $669,718,000
Percentage of Berkshire Hathaway’s 13F Portfolio: 0.22%
Number of Hedge Fund Holders: 89
Loss in 2021: 12.02%
In Q3 2020, Buffett acquired a stake in T-Mobile US, Inc. (NASDAQ:TMUS), which is a Washington-based wireless network operator. As of the third quarter of 2021, the billionaire holds an unchanged position in T-Mobile US, Inc. (NASDAQ:TMUS), with 5.24 million shares worth $669.7 million.
Although T-Mobile US, Inc. (NASDAQ:TMUS) delivered a loss of 12.02% in 2021, the company posted its preliminary customer figures for Q4 on January 6, which exceeded market expectations. T-Mobile US, Inc. (NASDAQ:TMUS) reported that it will gain 1.8 million additional postpaid customers in Q4, versus an expected 1.57 million. This will bring the total customers to a record 108.7 million. T-Mobile US, Inc. (NASDAQ:TMUS) is also one of the industry leaders catering to the 5G frenzy.
Morgan Stanley analyst Simon Flannery lowered the price target on T-Mobile US, Inc. (NASDAQ:TMUS) to $149 from $152 and kept an Overweight rating on the shares on January 12, ahead of the company’s Q4 report due in early February. He cut his estimates, particularly for 2022, to account for a more conservative synergy assumption and higher capex.
Billionaire Andreas Halvorsen’s Viking Global is the largest T-Mobile US, Inc. (NASDAQ:TMUS) stakeholder from the 89 hedge funds that were bullish on the stock in the third quarter of 2021. Halvorsen’s fund owns more than 10 million T-Mobile US, Inc. (NASDAQ:TMUS) shares, worth $1.30 billion.
Here is what ClearBridge Investments had to say about T-Mobile US, Inc. (NYSE:TMUS) in its Q1 2021 investor letter:
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included communication services, where T-Mobile trailed after generating robust returns earlier in the recovery.”
2. Teva Pharmaceutical Industries Limited (NYSE:TEVA)
Berkshire Hathaway’s Stake Value: $416,768,000
Percentage of Berkshire Hathaway’s 13F Portfolio: 0.14%
Number of Hedge Fund Holders: 22
Loss in 2021: 23.59%
Teva Pharmaceutical Industries Limited (NYSE:TEVA) is an Israeli multinational pharmaceutical company that manufactures generic drugs and biopharmaceutical medicines. Teva Pharmaceutical Industries Limited (NYSE:TEVA) returned a loss of 23.59% in 2021, thus making it to our list of Warren Buffett’s worst performing stock picks. The company also failed to meet its Q3 2021 EPS and revenue consensus estimates.
Acquiring a stake in Teva Pharmaceutical Industries Limited (NYSE:TEVA) back in Q4 2017, Buffett’s position in the stock has remained unchanged since the first quarter of 2020. He holds 42.78 million Teva Pharmaceutical Industries Limited (NYSE:TEVA) shares, worth $416.7 million in Q3 2021, representing 0.14% of the billionaire’s total 13F securities.
Teva Pharmaceutical Industries Limited (NYSE:TEVA)’s shares fell 4.7% on December 30, 2021, when the New York court charged the company as guilty of fueling the opioid crisis. Teva Pharmaceutical Industries Limited (NYSE:TEVA) disagrees with this conviction and will pursue a mistrial.
Among the hedge funds tracked by Insider Monkey in the third quarter of 2021, 22 funds reported owning stakes in Teva Pharmaceutical Industries Limited (NYSE:TEVA), worth $950.6 million. David Abrams’ Abrams Capital Management is one of the leading company stakeholders, holding 24 million shares, valued at $234.2 million.
1. StoneCo Ltd. (NASDAQ:STNE)
Berkshire Hathaway’s Stake Value: $371,346,000
Percentage of Berkshire Hathaway’s 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 37
Loss in 2021: 79.43%
Berkshire Hathaway portfolio holds 43 distinguished stocks, and StoneCo Ltd. (NASDAQ:STNE) reported the worst performance comparatively, with the loss in 2021 totaling 79.43%. StoneCo Ltd. (NASDAQ:STNE) is a fintech company offering cloud-based financial solutions.
Buffett bought a stake in StoneCo Ltd. (NASDAQ:STNE) in Q4 2018, and kept his position constant until Q1 2021, when he reduced his shares from 14.1 million to 10.6 million. As of the third quarter of 2021, Buffett owns a $371.3 million position in StoneCo Ltd. (NASDAQ:STNE).
On November 16, after StoneCo Ltd. (NASDAQ:STNE)’s Q3 results were announced, the stock dipped 6.7% in after-hours trading since the bottom line reflected increased investment in operations and a fair value adjustment on equity securities. The Q3 EPS also missed market consensus estimates, and dropped as compared to the prior-year quarter.
UBS analyst Kaio Prato downgraded StoneCo Ltd. (NASDAQ:STNE) on January 4 to Neutral from Buy with a price target of $21, down from $47. The analyst believes that 2022 will be challenging for StoneCo Ltd. (NASDAQ:STNE), as the company has too many points to focus on, including the credit business turnaround, price increases for merchants to at least partially offset higher funding costs, and an environment of intense competition.
Billionaire Stephen Mandel’s Lone Pine Capital is the leading StoneCo Ltd. (NASDAQ:STNE) stakeholder as of Q3 2021, with over 15 million shares worth $524 million. Overall, 37 hedge funds were bullish on the stock in the third quarter.
Here is what ClearBridge International Growth EAFE Strategy has to say about StoneCo Ltd. (NASDAQ:STNE) in its Q3 2021 investor letter:
“Brazil is another emerging markets focus for the Strategy and here we were hurt by payments company StoneCo. The stock sold off primarily due to surprise write-downs in its lending business, which began in the first quarter and continued into the second and have weighed on earnings. Lending is a relatively new business for StoneCo but was expected to be a substantial growth driver. Non-performing loans increased in the first quarter largely at merchants heavily impacted by COVID-19 lockdowns. Technical issues have caused delays in the government’s launch of a nationwide receivable marketplace, compounding the negative impacts on new business profitability. Stone, in turn, has halted lending until that marketplace opens. We believe the worst of the write-downs are behind us and core company fundamentals remain solid.”
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